SP500 Analysis

4:35 p.m. New York time

After the closing bell. The S&P 500 traded in a narrow range during the day, staying with 23 points on the futures and 14 points on the index. No change in the analysis. I’ve updated the chart.

10:10 a.m. New York time

What’s happening now? The S&P 500 E-mini futures fell overnight to 4370.75 in a small correction within the final leg of an uptrend that began on July 19.

What does it mean? The uptrend, typically, will end close to the boundary of the price channel that began in March, presently in the 4360s and rising.

What’s the alternative? Uptrends sometimes fall short of the boundary by a large measure, a condition called “truncation” in Elliott wave theory. So it’s possible that yesterday’s high, 4422.50, was the end of the uptrend, and the overnight decline was a first step in a significant downtrend.

[S&P 500 E-mini futures at 4:35 p.m., 6-hour bars, with volume]

What does Elliott wave theory say? By my principle count, the overnight decline was a correction within rising wave 5 of Minuscule degree within wave 5 of Submicro degree. The simultaneous completion of those waves, near the upper boundary of the price channel, will mark the end of wave 3 of Micro degree within wave 5 of Subminuette degree. Micro 3 will be followed by a 4th wave correction — probably a sideways-trending Flat pattern — and then a 5th wave push to new highs.

Under my alternative count, wave 5 of Minuscule degree up to wave 3 of Micro degree ended well short of the channel boundary, at yesterday’s high of 4422.50. Under this scenario, the overnight decline was a first step in wave A of Submicro degree within wave 4 of Micro degree.

Learning and other resources. See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, July 30, 2021


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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